When Your Business Goofs, CRM Can Be Your Best Friend

You have to understand the value of the customer to you -- but if you're doing this right, you should also have an idea of what the customer values. Figure that out, tailor your efforts to make amends based on it, and you're on the way to turning a problem into a potential loyalty-builder. You can't do any of this without the knowledge your CRM system should be providing you -- and you can't get that knowledge without really working on CRM before the mistake is made.

There are three things certain in life. We all know the two cited by Benjamin Franklin, but there's a third certainty that we all face regularly and have to cope with constantly.

That's the certainty that we'll make mistakes. Everyone makes them; if it hasn't happened to your business, you haven't been in business long.

Mistakes affecting customers can be embarrassing, painful, costly -- and, in the era of social media, broadcast to millions of people. How do you deal with them?

The suggested steps for dealing with problems are well-known -- or at least easily available: Take problems seriously; be sincere in your response; apologize; ask questions; and take whatever reasonable steps you can take to rectify the situation.

Beyond the obvious steps is the advice of Paul Gillin: Be empathetic.

"People want empathy more than they want an apology," he has said in speeches.

The common wisdom is that you can't affect how the customer responds -- only how you respond. This is where I think the common wisdom is wrong. The things you do to build a relationship with the customer before the mistake occurs play a direct role in how the customer responds to your business when it errs.

There's a reason for this: People are more forgiving when there's a relationship in place. Do you cut your friends or your family more slack when they goof up than you do strangers? Probably -- especially when a mistake is clearly a mistake made in good faith.

That relationship provides a cushion that allows people to get past the emotions that a mistake can generate. Emotions are the key in dealing with a mistake: The mistake generates negative feelings, and the responses to the mistake should generate positive feelings.

Good responses bring customers back to the level of satisfaction they had before you screwed up; very good responses can leave customers with an even better opinion of the company, as studies have shown.

So how do you do you prepare for the inevitable time when you drop the ball?

1. Work Hard at CRM Before Problems Occur

In this case, CRM does not mean technology -- it means what the acronym stands, for, especially the middle letter.

Whether or not you have a CRM application in place, you can develop a CRM strategy and work hard to make sure it creates the kinds of relationships that will stand up over the long haul.

Loyalty must be earned -- and it's a lot easier to earn it when customers are happy than when they are upset over something dumb you've done.

2. Use CRM to Understand Customers Who've Been Wronged

The way you make up for a mistakes is likely to have as much to do with your customers as it does with you. If you've been working at No. 1, then you ought to be able to quickly understand the customer your goof-up affected. Of course, every business says it'll bend over backward to satisfy its customers, but for a customer with a longer and more lucrative buying history, you might bend over backward a little faster -- and maybe throw in a half-twist.

You have to understand the value of the customer to you -- but if you're doing this right, you should also have an idea of what the customer values. Figure that out, tailor your efforts to make amends based on it, and you're on the way to turning a problem into a potential loyalty-builder.

Again, you can't do any of this without the knowledge your CRM system should be providing you -- and you can't get that knowledge without really working on CRM before the mistake is made.

3. Just Resolve the Problem

I wrote about this in 2010 in describing a situation in which an online hobby shop's credit card fulfillment system
was compromised. The response, combined with the relationships developed and nurtured by the company before the problem occurred, actually strengthened its customer relationships. In short, there are seven steps to making amends for mistakes:

1) Don't lie.
2) Be proactive.
3) Keep the information coming until the matter's resolved.
4) Forget about who's at fault -- the customer does not care.
5) Thank people for their patience.
6) If you can't fix things entirely now, adopt a partial fix and keep working on it.
7) Have an existing relationship in place to allow steps 1-6 to flow more easily.

The last step is the one you can work on before your business makes a misstep.

4. Follow Up and Keep Building the Relationship

If you make a mistake, you owe the customer a little extra attention. A follow-up to make sure things are squared away is the least you can do; a discount, freebie or offer of free extra service is probably a better idea.

The goal is to make sure the customer knows that you regret the error, and to do so on a human level -- not as a business that desperately wants to retain a customer, but as a person looking to make amends to another person. You can't have that person-to-person connection that will get you past the mistake without an existing relationship.

We often look at CRM as an accelerator for sales, or a way to tie sales, marketing and support together, or as something that helps us achieve a business result. Essentially, it's about customer acquisition and retention, and it's often about scale. However, it can be a great tool for retention in a one-to-one scenario, too -- if you use it to build relationships before retention becomes an issue.

CRM Buyer columnist Chris Bucholtz blogs about CRM at the
CRM Outsiders. He has been a technology journalist for 17 years and has immersed himself in the world of CRM since 2006. When he's not wearing his business and technology geek hat, he's wearing his airplane geek hat; he's written three books on World War II aviation.